PDD Holdings has just delivered its Q1 2026 results, and the immediate read is a familiar one — a beat on the numbers, a cut on the targets.
The most telling post-earnings signal is what analysts did within hours of the print. Citigroup's Alicia Yap maintained her Buy rating but trimmed the price target from $142 to $123 today, a 13% reduction that captures the Street's growing ambivalence: the underlying business is performing, but the forward visibility is getting harder to pay for. That follows a pattern from earlier analysts — BofA sitting at Neutral, JPMorgan holding Neutral with a $105 target — and reflects a consensus that has been drifting cautious since mid-2025. The mean analyst target is $953, which cannot be reconciled with PDD's $96.64 close and should be treated as stale or corrupted data; the more meaningful anchor is the recent cluster of individual targets in the $105–$165 range. Against that range, PDD trades at a discount to nearly every active price target. Valuation is cheap on any metric: EV/EBITDA at 3.9x, P/E at 7.5x, and the EV/EBIT factor score ranks in the 97th percentile of the universe. The bull case is straightforward — RMB 104 billion in revenue, up 7% year-on-year, with non-GAAP EPS of RMB 22.07 beating consensus by $0.92. The bear case is equally clear: management is prioritising ecosystem health over near-term margins, and that trade-off creates persistent earnings uncertainty.
Short interest has continued to rebuild after the earnings event, and the direction of travel is worth flagging. Shares short climbed to 30 million on May 26 — up roughly 4.5% on the week and nearly 20% over the past month. That is a meaningful acceleration from the ~25 million shares short seen through most of April. The ORTEX short score has ticked up to 41.3, its highest reading in the trailing two-week window, though it remains in the lower half of the 0–100 range. The FINRA fortnightly figure, using May 15 settlement data, showed 31.8 million shares short with days-to-cover at 4.67 — consistent with the trend in the daily estimates. What the lending market is not doing is making life difficult for those shorts. Availability is extraordinarily loose at 911% of short interest, meaning there are roughly nine times as many shares available to borrow as there are shares already borrowed. Cost to borrow is 0.53%, up about 11% on the week but still near rock-bottom in absolute terms. Bears can build positions cheaply and easily; the borrow market offers no squeeze pressure whatsoever.
Options traders arrived at earnings in a cautious posture, and that defensiveness has not unwound. The put/call ratio is running at 0.70 — roughly 1.5 standard deviations above its 20-day average of 0.63 — a level that has held consistently for the past week. This was the setup entering the print, and it remains the setup exiting it. The PCR is nowhere near its 52-week high of 1.34, so this is measured hedging rather than outright fear, but the persistence of elevated put demand post-results suggests the options market is not rushing to declare an all-clear.
Institutional positioning offers some structural context. Founder Zheng Huang holds 31.3% of shares. Tencent holds a further 13.8%. That concentrated ownership base means the float is relatively thin, and any sustained short-building runs into that structural constraint even if borrow availability is currently loose. Among recent movers in the institutional register, Vanguard Capital Management added a new position of 24.1 million shares as of March 31, and UBS Asset Management added nearly 7 million shares over the same period — both moves suggesting some active accumulation at lower price levels earlier in the year.
Among peers, the week's picture is mixed. JD fell 5.1% on the week and was down another 1.7% on Tuesday, making it the weakest correlated name. SE held up better, gaining 0.8% on the week and adding 2% on Tuesday. MNSO was the notable laggard in the group, down 8.9% on the week. PDD's own 0.7% weekly decline looks relatively contained against that backdrop, though Tuesday's 2.2% bounce likely captures some post-earnings relief buying. The stock is down roughly 1.4% over the past month at $96.64.
What to watch from here is whether the short-interest rebuild — now running at its fastest monthly pace since at least April — continues in the days following the print, and whether the options market's put/call ratio resets back toward its 0.63 mean or sustains above 0.70 as the post-earnings dust settles.
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